The following are remarks made by Guy-Robert LUKAMA NKUNZI, Gecamines Chairman, on Friday, October 25th at the Atlantic Council in partnership with Rawbank.
Ladies and gentlemen,
Dear and Honorable Guests,
Thank you for allowing us to deliver the opening remarks for this roundtable. Thank you to the Atlantic Council, in partnership with Rawbank, for organizing such an important event—my pleasant regards to Ambassador Rama Yade and M. Mustafa Rawji.
I think this important topic captured in the question is key, as we have to find the tools that can unlock the potential of DRC critical minerals and diversify the offtake to design the pathway for a shared value created with investors and Congolese people in terms of wealth, jobs and sustainable future.
Congolese authorities and their partners have to collaborate to create an attractive regulatory environment, mitigate risk, and improve the overall perception of the DRC.
Our key message to those seeking to invest is that they must understand our natural resource endowment will catalyze driving value beyond the mining sector.
Wealth creation, job creation, advancing peace, security, stability and development – these are the primary interests that should drive public and private investment priorities in Congo.
That is why, before answering, I think it is helpful for us to question the current situation and its causes.
Can we say that investment in the natural resources sector in the DRC needs to be unblocked?
I share the observation that we do not currently have the range of investors needed to fully realize the potential to capitalize on our national resource wealth. Moreover, I am not sure that the existing portfolio fits DRC’s long-term ambition.
However, we must focus our efforts on creating a scenario where the mining sector becomes a profitable catalyst for other economic sectors. The current paradigm is unsustainable, and we need to develop systems to create opportunities and provide benefits not only to the mining supply chain but also to the larger Congolese population.
We must also recognize the geopolitical contexts of what abounds in the subsoil of Congo. China, for example, continues to invest in the DRC to secure access to critical minerals.
We must ask ourselves, what is preventing broader investment? The risk of corruption and weak governance are no longer sufficient to justify the lack of investment.
We must also recognize that the world of 2024 is not the world of the early 2000s – circumstances have changed, Congo has changed.
It is a challenge for us to align the interests of DRC and the rest of the world in a balanced way that is beneficial to all.
As we all know, the DRC’s position on critical minerals mapping makes it unavoidable. In addition to our critical minerals, we have many related assets, such as our geographical position in the heart of Africa, equidistant from two oceans, which allows us to export around the world.
We are more sustainable – our hydroelectric potential already allows us to produce minerals with a low carbon footprint and in line with global regulations: Green metals produced with green power.
Our infrastructure network is developing, from east to west, with the Lobito corridor, which is a formidable accelerator for trade and development.
We are particularly open to investment if it helps us to trigger prosperity; we are calling for more fair competition in the exploration and exploitation of our assets and the diversification of our investors and off-takers of our production.
For us, competition will push all operators on our soil to improve their production standards and interactions with the local community, which benefits everyone. It also makes it possible to propose innovative partnership models for the exploration of our resources. Previous models showed their limits in improving returns to the country or improving governance of the sector.
Currently, this is not the case.
I am saddened every day to see that the assets of my country can be emptied at a low price, like they are now for cobalt and exported as raw materials with low transformation with key imbalances inherited from past governance.
Cobalt, for example, is no longer perceived by many stakeholders as a Congolese resource, even though we produce most of the cobalt supplied to date.
What is the allocation for DRC’s share of value created?
It is insignificant when we know its decisive role in all current economies. Diversification of partners and greater local processing are necessary for a better return on our contribution through access to our natural resources to the current industrial revolutions underway. Fair value, no more!
I want to share an observation that leaves me somewhat circumspect. Many investors seem concerned about the the preponderance of Chinese investments in the mining sector in the DRC but in the mean time they are not investing. As a DRC company, we would welcome investment from any countries which would like to come because it would help us to raise our standards to higher levels and give us better opportunities of development .
Yes, the business climate has to be improved, and efforts have been made to address it. We do not deny the challenges, but I can guarantee that a lot has been done to reassure investors under the authority of His Excellency Félix-Antoine Tshisekedi Tshilombo. However, I share the conviction that our legislative frameworks are attractive, and that no one has disinvested in the DRC. No one! None of those who have been in DRC for a long time has reduced their footprint in terms of heavy investments. And we are talking in billions of USD since 2018, the year of the reform of the legal mining framework.
Challenges remain, but progress is being made.
Not everything is rosy, not everything is dark. Our challenges are related to skills, infrastructures, and access to energy, an investment opportunity in itself; I have just come out of another round table dedicated to the Grand Inga, a long dream but soon a reality!
What is blocking investing in DRC despite the alerting need for critical minerals?
Watching CNN and fearing eastern Congo? Key critical minerals are not there, and few incidents have occurred in the mineralized zone that may deter investment.
What else? We need to look at Section 1502 of the Dodd-Frank Act. We can discuss it at greater length, but, in short, it is quite a hindrance.
This is an opportunity for me to applaud the bipartisan initiative that is taking place in the U.S. legislative chambers, the BRIDGE ACT, which will be a determining element in the new American dynamic to want to invest in the DRC. Thank you to Mr. John James, Ms. Sarah Jacobs, and all who are pushing this agenda.
Let’s not be discouraged by the latest US Department of Labor report. Cobalt Institute had the intelligence to quickly organize a recent symposium in the DRC that brought together the stakeholders to dispel the misunderstandings arising from this publication. The DRC Government, the US Department of Labor, the DRC Chamber of Mines, representatives of the European Union, and all mining operators were able to express themselves in order to mitigate the effects and the actual impact. It was an opportunity to tell each other everything to continue the inevitable march towards more investment in the Congolese mining sector.
Among the avenues proposed to attract investors, we are currently thinking within Gécamines – which are a reflection of what is being broadly carried out by the State – about how to propose partnerships to investors that allow us to integrate the value chain from mining to the local processing of our minerals.
We are convinced that the investment model must evolve, and our future partners can endorse it. We can no longer be satisfied with being exporters of raw materials or of materials in metal form, which provide low returns for our country.
We must do everything possible to ensure the local processing of minerals extracted in the DRC, increase local added value job creation, and capitalize on subcontracting. This is an economic imperative for us, but also an ecological one, because transporting thousands of kilometers of raw minerals to be processed by employees who are often low-skilled and modestly earned constitutes a historical contradiction.
We demonstrated what we could do with STL, wholly owned by Gecamines and financed by Rawbank and Gecamines, which developed a unique plant for the processing of alloys and now produces cobalt, copper, and germanium locally. It is better than exporting alloys and concentrates to be processed abroad. We are open to anyone who wants to replicate this approach toward a cobalt refinery jointly.
We are curious to learn from others who succeeded, and we know that the attractiveness of capital is important. The Atlantic Council has drawn up a fascinating report on the Indonesian example, which teaches us how to manage our strategic assets, value chains, and exports.
It can be noted that Indonesia developed a proactive policy around two main axes: firmness on the ban on the export of raw minerals and attractiveness for foreign investment with a very rapid and massive effect on the creation of new local refinery projects in Indonesia.
This policy has resulted in a tax and industrial policy favorable to foreign investors. Nevertheless, when we look at the sources of investment and the sponsors of projects, we observe that China still maintains a dominant position—we want to diversify, we are open to other partners. Which brings us back to our starting point, how to we unlock investment in the critical minerals sector? Progress has been made, but more is to be done.
Thank you
Guy-Robert Lukama Nkunzi
Chairman of the board of Gecamines
